Fourth Quarter 2022 Review

The third quarter repeated a familiar pattern we’ve seen in 2022, where every time the markets have tried to price-in a peak in the interest rate cycle, some combination of strong labor market data, stubbornly high inflation, and central bank policy has pulled it back.  

 We’ve arguably reached a point in the cycle where strong US economic data is actually bad news for markets, because it implies the Fed needs to do more to slow demand. We know it may seem counterintuitive, but what investors should be looking for now are signs of economic weakness, a peak in inflation data, and even a mild recession.